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Minimum Credit Score for Home Loan Australia | RateCity

Jodie Humphries avatar
Jodie Humphries
- 5 min read
Minimum Credit Score for Home Loan Australia | RateCity

When you are starting the home loan application process, you could have some anxious moments about how lenders will view your application. Typically, lenders look at factors such as age, occupation, and income. In addition to those, your credit score plays an important role in evaluating your application.

A credit score is a number used by lenders to assess your creditworthiness, so they can be confident that you can responsibly manage your home loan repayments. You need to understand the factors that affect your credit score, and also what credit score you’ll need to buy a home.

How do credit scores work?

Your credit score signifies your ability to repay a loan on time and provides a gauge of any future risk of default, based on your credit history.

Every time to apply to borrow money in Australia, your credit activity is sent to credit reporting bureaus. These bureaus collect your credit history in your credit file and use this information to generate your credit score.

Different credit bureaus generate credit scores differently, but the higher your credit score, the better your credit rating, and the more likely you are to see your loan applications approved.

For example, are Experian and Equifax’s credit score bands:

Credit band

Experian credit score

Equifax credit score


800 – 1000

853 - 1200

Very good

700 – 799

735 – 852


625 – 699

661 – 734


550 – 624

460 – 660

Below average

0 - 549

0 – 459

What is the minimum credit score required to buy a house in Australia?

Most Australian mortgage lenders don’t make their credit criteria public, which makes it difficult to find out the exact credit score you need to qualify for a home loan. To complicate matters further, most lenders don’t depend solely on your credit score to measure your risk; they also rely on their own internal credit evaluation yardsticks.

While it is difficult to put your finger on the exact cut-off mark to qualify for a home loan, some benchmarks help to determine if your score will make the cut. 

  • Below average: You likely fall into a high-risk category, so conventional lenders may be reluctant to grant you a home loan. A few lenders may still consider your application even with a low score, but the interest rates may be higher.
  • Fair or average: A credit score in this bracket usually means that you have some negative marks in your file, and lenders might ask for more information before they’ll approve your loan application.
  • Good: Having a credit score in this band may help to improve your home loan application’s chances of approval. You should also have access to lower interest rates than those with average credit scores.
  • Very good: Most lenders should be eager to have your business and will gladly offer you a home loan.
  • Excellent: An excellent score is one that lenders consider to be extremely low risk, and lenders will be keen to offer you a loan. Approvals are generally quick, and you may have more options to choose from than those with lower scores.

Can I get a home loan with a low credit score?

The chances of getting approval on your home loan application with a Fair or Average credit score may be high, and even higher if your credit score if Good, Very Good, or Excellent. But can you still get a home loan if your credit score is below average?

Yes, you’re still eligible for a home loan with a below average credit score, but you may need to approach a specialist or non-conforming lender. These lenders offer bad credit home loans to higher-risk borrowers with lower credit scores. Bad credit home loans are like regular home loans, but generally have much higher interest rates and less choice in home loan options. These limitations are due to the risk associated with lending to people with low credit scores.

Bad credit lenders still have their own internal guidelines regarding which loan applications they approve, which often depends on a variety of factors. It may be helpful to use the services of a mortgage broker in such a scenario, as they can suggest which bank is likely to have a home loan product that suits your needs. Applying with a lender directly and getting rejected may negatively affect your credit score further because each application submitted will reflect on your credit file.

What’s the minimum credit score for a home improvement loan?

Not all home loan applications are for the purchase of a home or an investment property. Perhaps you’re looking to finance a home renovation project and wish to borrow money. In this case, applying for a home equity loan or home equity line of credit is one way of getting the money you need to complete your renovation. Once again, your credit score is a key factor considered by lenders at the time of evaluating whether you qualify for a home equity loan.

A good or fair credit score may be considered acceptable, but some lenders might charge you a higher interest rate. Some may even wish to look at other financial factors, such as your overall debt, your debt-to-income (DTI) ratio or the amount of equity you currently hold.

A DTI ratio gives an idea of your total monthly debt payments, and it is calculated based on how much you earn and how much you spend on your recurring debts and liabilities. These include credit cards, existing loans, tax debt, etc. Most lenders look for a low DTI ratio, which can work in your favour if you also have a low credit score, as this could give the lender more confidence in your ability to repay the loan.


This article is over two years old, last updated on October 2, 2020. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent home loans articles.

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This article was reviewed by Personal Finance Editor Georgia Brown before it was published as part of RateCity's Fact Check process.